Whether medical oxygen and nitrous oxide can be treated as medicines for the purpose of levy of tax under the Kerala General Sales Tax Act, 1963 (for short, “the Act”) is the question involved in this case.

2. The assessee is the revision-petitioner. State is the respondent. The assessment year is 1987-88. The assessee is engaged in the manufacture and sale of medical oxygen and nitrous oxide. In the assessment for the year 1987-88 the assessee contended that the said two items are liable to be assessed at the rate of 5 per cent under the Notification G.O. (Rt.) No.242/84/TD. The assessment was originally completed by assessing “medical oxygen” at 5 per cent under the above notification and “nitrous oxide” at 6 percent under entry No.85 of the First Schedule to the Act as it stood at the relevant time. However, the said assessment was reopened under section 19 of the Act on the ground that “medical oxygen” and “nitrous oxide” are liable to be assessed at higher rates. In spite of the objection taken by the assessee, the assessing authority passed a revised assessment order dated July 22, 1992 (annexure A) under which “medical oxygen” was assessed at the rate applicable to “gases liquefied or not” at 8 per cent under entry No.85 of the First Schedule to the Act which came into force with effect from July 1, 1987. The assessing authority took the view that the Notification G.O. (RT.)No.242/84/TD dated April 2, 1984 did not survive after the introduction of entry No.85 of the First Schedule to the Act. The assessing authority also took the view that the subsequent Notifications S.R.O. No.976/89 had effect only from June 13, 1989 and therefore for the period from July 1, 1987 to June 13, 1989 “medical oxygen” has to be classified only as a “gas” as specified in entry No.85 of the First Schedule to the Act. The contention of the assessee that “nitrous oxide” is a “medicine” was also rejected by the assessing authority by stating that it is sold by the assessee in gaseous form and this also is liable to be assessed at the rate applicable under entry No.85 of the First Schedule to the Act.

3. In the appeal filed by the assessee the Additional Deputy Commissioner (Appeals), Agricultural Income-tax and Sales Tax by order dated September 20, 1994 (annexure B) dismissed the appeal by affirming the order passed by the assessing authority. The further appeal filed by the assessee before the Appellate Tribunal also was unsuccessful. Hence the revision.

4. In this revision, the assessee had raised the following two questions of law.

“(i) Whether, on the facts and circumstances of the case, was the Tribunal justified in holding that medical oxygen and nitrous oxide would fall under entry No.85 and not under entry 116 (Medicines) of the First Schedule to the KGST Act?

(ii) Should not the Tribunal have held that medical oxygen and nitrous oxide being used in treatment are taxable under the specific entry providing for “medicines” under entry No.116 of the First Schedule to the KGST Act?”

5. The question as specified above is to the effect that the two items, namely, “medical oxygen” and “nitrous oxide”, would fall under entry No.116 of the First Schedule to the Act and not one falling under entry No.85 of the First Schedule to the Act. To put it differently, the question is regarding the relevant entry under which the two items “medical oxygen” and nitrous oxide” would fall.

6. Shri A.K. Jayasankar Nambiar, learned counsel appearing for the petitioner-assessee submits that “medical oxygen” is manufactured by the assessee for use in the hospitals and the dominant use of “medical oxygen” is the use in hospitals for administering it on patients. Counsel submits that “nitrous oxide” is the use in hospitals for administering it on patients. Counsel submits that “nitrous oxide” is also manufactured for use in hospitals as anesthetic agent. Counsel submitted that all those who deal in both the items understand them only as medicines. Counsel furt